Seeking to reorient and stabilize, Citigroup is selling its Citi Propery Investors portfolio in order to focus on its retail and investment banking businesses. Ironically, Joseph Azrack who helped build a $13 billion portfolio of commercial properties for the bank and which now has plummeted in value since his departure in 2008, is in the running to once again manage it. Two firms are bidding to take over the portfolio, Apollo Global Management LP and an Australian company, Macquarie Group. Subsequent to Mr. Azrack leaving Citigroup, he was hired by Apollo Global. No final decision by Citigroup has been made to date.
The steep decline in commercial real estate values has lead investors to question the management of these bank sponsored funds At the height of the market, Morgan Stanley as well as Goldman Sachs Group Inc., raised multi-billion-dollar real state funds, which in tandem, generated millions of dollars in management fees.
Today, with the benefit of hindsight many investors are considering the strategy of investing in large-bank real estate funds.
[Data Source: WSJ, January 28, 2010]
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